As part of our Growth Tactics podcast series, I interviewed Depology CEO and co-founder Alex Lee. You can listen to the podcast here.
We spoke about how after years of struggle as a small ecommerce site, Alex pivoted to beauty and skin care products in 2019. And how the business then grew rapidly to $10M in revenue in ten months. And within 3 years, Depology had reached $20M in sales.
I asked Alex about how they did it. Which growth tactics worked? Which didn’t?
This short article is my list of which growth tactics worked.
Overall, it was a fun discussion with quite a few valuable lessons. Plus, it’s great to see one of my former MBA students doing so well.
Growth Tactic 1: Identify the Popular Channels Early. And Work with Influencers Aggressively.
Alex ascribed much of their initial growth to getting on TikTok in 2019. Today, everyone is on the site. But knowing TikTok would be super popular back in 2019 was key. Identifying and getting on the right sites is key.
It’s also about getting there before others. That gives you an “attention arbitrage”. Being early makes it easier to gather traffic. As social media and content sites grow, they become congested. Getting traffic becomes harder and more expensive.
Getting there early also makes it easier to work with influencers. And Alex talked a lot about how important it is to work with influencers. It’s a powerful approach. He talked about working with dermatologists on TikTok early on being very effective. Influencers tend to become more expensive over time. Plus, their influence fades with congestion.
Finally, he mentioned TikTok Live, which is currently big focus for ByteDance. That’s a platform to pay attention to. It’s really powerful in China already. And it should be a big focus for ecommerce and content companies internationally.
Growth Tactic 2: Study China to Know What’s Coming Next in Ecommerce
We talked about how he knew to focus on TikTok in 2019. He basically said that he spoke with other ecommerce executives in China. TikTok was already big in China at that time. But the advice was to focus on its international expansion.
China is just a really vibrant ecommerce space. It’s arguably the epicenter of ecommerce innovation. That means you can see what’s coming next. Before it reaches the US and Europe. Think TikTok, Shein, Temu, live-streaming, community group buying, bullet chat, etc.
Growth Tactic 3: Study 18 Year Olds to Find New Growth Tactics
I asked Alex about how to find new growth tactics. Do you just try lots of stuff and see what works?
Alex said to study the 18-year-olds (i.e., young people) on TikTok, Facebook and the other big sites. Lots of young people want to be influencers. They want to create content. They want to become famous. They want to sell stuff.
But most have no money or resources. So, they have to be creative and find clever ways to get attention and engagement. Young people on the big ecommerce and social media sites are just a massive pool of experimentation and innovation.
So just study what they are doing. When you see something really starting to work, you just copy it.
I thought that was super smart.
However, you can put these growth tactics into two categories:
- Clever tricks and formats that get more attention. Like the emergence of reaction videos. These can be good for short-term growth.
- New products, customers, or geographies. When you see a new product category emerge, that is a big deal. Or a new customer demographic. Or geography. These can be sources of longer-term growth.
Growth Tactic 4: Be an Entertainment Business First.
Alex had an interesting comment about how they view themselves as an entertainment business first. Yes, quality beauty products and a great user experience are very important. But you are in a never-ending fight for consumer acquisition and engagement. And that means creating content and entertaining people.
In practice, you can be influencer or a business that works with influencers. There are lots of examples of influencers becoming brands. I think being a business that works with influencers is better long-term. Although, there’s no reason not just to do both.
Growth Tactic 5: Increase Retention by Studying Your Customers and Creating Content.
The consumer acquisition game keeps changing. Facebook keeps changing the algorithm. Platforms become congested. Things that used to work, no longer work.
Consumer acquisition is a frustrating game.
But it’s a game lots of businesses simply have to play. And it’s mostly outside of their control. Consumer interests keep changing. Platforms keep changing their rules. It’s a never-ending arms race.
However, consumer retention is a game you can control. And it’s a game you can win long term.
If you have good ongoing communication with your consumers, they will stay. You need good content. You are probably relying on emails. Unless you can get traction with a mobile app. You need to continually add new services and surprises.
I asked Alex how to improve retention. He said:
- Know customer base really, really well. This is what matters the most.
- Then create great content for them.
Growth Tactic 6: Pivot to More Impactful Product Categories
This is more my point.
You can’t do entertainment and highly engaging ecommerce about socks. You just can’t. Consumers don’t care enough. Nobody wants a relationship with a sock company.
But people really care about beauty and skin care. They want to learn about products. They want to try them. It’s important to them. It’s entertaining.
You need a product category that has real impact on consumers. Where there are lots of different dimensions of the user experience to build upon. For beauty and skin care ecommerce, you can build:
- Quality product selections.
- Educational content.
- Entertaining content.
- Communities for discussions and sharing. They can be online and offline.
- In person experiences. Such as pop-up stores.
Most of these are not possible in most product categories. Because people don’t enough about socks or ketchup.
I think the pivot to this category is a big part of their success.
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Ok. that’s it for today. I thought those were pretty helpful.
Cheers, Jeff
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- What is Elon Musk’s Plan to 10x Twitter? (2 of 2) (Tech Strategy – Daily Article)
From the Concept Library, concepts for this article are:
- Growth: Hacks and Tactics
- Ecommerce
From the Company Library, companies for this article are:
- Depology
Photo by Christin Hume on Unsplash
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